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1
Contents
Introduction................................................................................................................................................... 3
How do the Carbon Farming Initiative and the Emissions Reduction Fund differ? ............................ 4
Do I need to re-register my project? ......................................................................................................... 4
Am I still a Recognised Offsets Entity (ROE)? ........................................................................................... 4
Do I still need my Australian National Registry of Emissions Units (ANREU) account? ...................... 4
Can I use the same methodology determination? .................................................................................. 4
Will crediting periods change? ................................................................................................................... 5
Will reporting periods change? .................................................................................................................. 5
Does my project still need to be audited? ................................................................................................ 6
Unscheduled or Triggered audits ...................................................................................................7
How do I sell my ACCUs? ............................................................................................................................. 7
Enter into a contract with the Government ...................................................................................7
Are there any changes to legal obligations? ............................................................................................. 8
Permanence ....................................................................................................................................8
Carbon sequestration right.............................................................................................................9
Can I withdraw my project? ........................................................................................................................ 9
Some changes to terms ............................................................................................................................. 10
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2
Introduction
Your Carbon Farming Initiative project automatically became an Emissions Reduction Fund project when
amendments to the Carbon Credits (Carbon Farming Initiative Act) 2011 came into effect. You do not need
to re-register your project and will be able to continue with your project using the same Carbon Farming
Initiative methodology determination.
As a scheme participant of the Emissions Reduction Fund, you need to be aware of some changes that affect
you. This booklet has been prepared by the Clean Energy Regulator to help make the change over to the
Emissions Reduction Fund as smooth as possible. It identifies what you need to know and what you need to
do as you move from the Carbon Farming Initiative to the Emissions Reduction Fund.
Anyone who submitted an application for an eligible offsets project to the Clean Energy Regulator before the
Emissions Reduction Fund commenced, and whose application is still under assessment, may also find the
content in this booklet helpful.
As the information in this booklet is confined to projects moving over to the Emissions Reduction Fund from
the Carbon Farming Initiative, it does not consider the Emissions Reduction Fund more broadly. For more
information about participating in the Emissions Reduction Fund, visit the Clean Energy Regulator website on
www.cleanenergyregulator.gov.au.
If you have any questions about the information in this booklet, please contact the Clean Energy Regulator
on 1300 553 542 or email enquiries@cleanenergyregulator.gov.au.
GPO Box 621 Canberra ACT 2601
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How do the Carbon Farming Initiative and the Emissions Reduction Fund
differ?
What you need to know: The Emissions Reduction Fund builds on the Carbon Farming Initiative by
offering emissions reduction opportunities to a range of sectors, including land, waste, coal, energy
efficiency, large facilities and other sectors undertaking activities. Through the Emissions Reduction Fund
auction arrangements, the Government will contract to purchase Australian carbon credit units (ACCUs)
from projects that are competitive at an auction. This purchasing process will allow participants in the
Carbon Farming Initiative to secure a return from eligible projects.
What you need to do: As a first step, read this document carefully and complete any of the actions
identified if relevant to your situation. For more information about the Emissions Reduction Fund, visit the
Clean Energy Regulator website.
Do I need to re-register my project?
What you need to know: All Carbon Farming Initiative projects automatically become Emissions
Reduction Fund projects when amendments to the Carbon Credits (Carbon Farming Initiative Act) 2011
come into effect.
What you need to do: You do not need to re-register your project.
Am I still a Recognised Offsets Entity (ROE)?
What you need to know: While there is no longer a Recognised Offsets Entity status, the requirement to
be a Fit and Proper Person (FPP) remains.
What you need to do: No action required for current Carbon Farming Initiative projects. As a current
Carbon Farming Initiative project proponent, you are deemed to have passed FPP provisions.
Do I still need my Australian National Registry of Emissions Units (ANREU)
account?
What you need to know: You still need your Australian National Registry of Emissions Units (ANREU)
account to be able to be issued with ACCUs and for transacting ACCUs.
What you need to do: No action required.
Can I use the same methodology determination?
What you need to know: Carbon Farming Initiative methodology determinations continue to apply under
the Emissions Reduction Fund unless they are varied. New Emissions Reduction Fund methods are in
development. You may vary your project to a new Emissions Reduction Fund method when they become
available.
What you need to do: No action is required if you wish to continue using the same methodology
determination. If you wish to vary your project to use a new Emissions Reduction Fund method, you will
need to apply to the Clean Energy Regulator when a method becomes available.
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Will crediting periods change?
What you need to know: All emissions avoidance projects, except savanna burning projects, are
automatically given a second crediting period of seven years from the date the Emissions Reduction Fund
starts. Savanna burning projects start a second crediting period of 25 years on the first day of January after
the Emissions Reduction Fund commences. This is to take into account the seasonal nature of these projects.
All sequestration projects, except avoided deforestation projects, are automatically given a second crediting
period of 25 years from the date the Emissions Reduction Fund starts.
Receiving a second crediting period means you can continue to run your project and earn ACCUs until the
end of the second crediting period for your project.
Avoided deforestation projects do not receive a second crediting period; the crediting period for these
projects remains at 20 years. An exception to this rule occurs when participants of projects using the Carbon
Farming Initiative avoided deforestation methodology apply to use an Emissions Reduction Fund avoided
deforestation method when it becomes available. In this situation, the crediting period specified in the new
method will apply to their project.
Participants are not able to apply for further crediting periods under the Emissions Reduction Fund.
You can still apply to claim ACCUs for abatement achieved under the Carbon Farming Initiative crediting
period as well as the Emissions Reduction Fund crediting period.
What you need to do: You will receive notice of the new crediting period for your project from the Clean
Energy Regulator. You need to decide when you will report under the Emissions Reduction Fund within your
crediting period. Make sure that report includes any abatement achieved under the Carbon Farming
Initiative for which you have not yet reported.
Will reporting periods change?
What you need to know: Under the Emissions Reduction Fund, you can still choose when to report on
your project, and may report as frequently as every six months where allowed for in the legislative rules
made under the Carbon Farming Initiative Act (2011). Audits are no longer required for each report.
The maximum reporting period for emissions avoidance projects has reduced from five years to two years.
The maximum reporting period for sequestration projects remains as five years to take into account the time
that a project may need to become established.
What you need to do: You must continue to report on your project to the Clean Energy Regulator. This
means when one reporting period ends, the next reporting period starts on the following day.
Make sure your first report to the Clean Energy Regulator under the Emissions Reduction Fund includes
abatement achieved since your last report. If you have never submitted a report to the Clean Energy
Regulator, make sure your first report to the Clean Energy Regulator under the Emissions Reduction Fund
includes abatement achieved from when your project was declared eligible under the Carbon Farming
Initiative.
If you enter into a contract with the Clean Energy Regulator under the Emissions Reduction Fund, you must
ensure you report in time to meet the delivery schedule set out in the contract.
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Does my project still need to be audited?
What you need to know: Under the Emissions Reduction Fund, the Clean Energy Regulator will adopt a
risk-based approach to audit. For most projects, this will mean a minimum of three scheduled audits over
their new crediting period (Table 1).
Scheduled audits consist of an initial audit for all projects, followed by a set number of subsequent audits. A
third audit category – unscheduled or triggered audits – may be identified by the Clean Energy Regulator for
individual projects and are additional to the minimum scheduled audit requirements.
All audits need to establish reasonable assurance that the amount of abatement achieved by a
project is accurate.
The number of subsequent audits for a project is determined by its potential average annual abatement
during its new crediting period (Table 1). Potential average annual abatement is calculated by dividing the
total amount of abatement expected to be generated during the crediting period of a project by the number
of years in the project’s new crediting period. The total amount of abatement expected to be generated
during the crediting period of a project is called the forward abatement estimate (FAE).
For example, Andrew expects his project to achieve 200,000 tonnes of abatement (tCO2-e). This is his FAE.
The crediting period for his project is 7 years.
200,000 / 7 = 28,571 tCO2-e average annual abatement.
Andrew’s project has an average annual abatement of 28,571 tCO2-e, and is therefore a small project
requiring a minimum of three scheduled audits.
Average annual abatement threshold
Number of audits
(for ERF crediting period)
Small project
Medium project
Large Project
Up to 49,999 tCO2-e
Three
50,000 – 150,000 tCO2-e
Four
Over 150,000 tCO2-e
Six
Table 1. Emissions Reduction Fund audit requirements. The audit minimum for a project is determined by the
size of a project in terms of the amount of abatement it achieves (in tCO2-e).
The scope of the initial audit will include your project’s declaration, that you still have the legal right to carry
out the project and the abatement reported in your project’s offsets report. It will also ensure the project
has been operating according to the method used. More information regarding the scope of initial audits is
available on the Clean Energy Regulator’s website.
Subsequent audits focus on the accuracy of a project’s reported abatement. The Clean Energy Regulator may
decide to extend the scope of a subsequent audit. If this occurs, the Regulator will notify the person
responsible for the project in writing, indicating the extent of the amended scope.
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Unscheduled or Triggered audits
The Clean Energy Regulator may identify projects requiring additional unscheduled or triggered audits. There
are three triggers the Clean Energy Regulator will use to determine those projects:

A single report claiming abatement over 100,000 tCO2-e.

A previous audit report with a qualified audit opinion. For example, an auditor may qualify their report
when some audit evidence was not able to be obtained.

Variance from any one of – or any combination of – a project’s expected abatement estimate, other
similar projects or from a general abatement profile of the method used.
What you need to do: The new audit approach will come into effect around February 2015. The Clean
Energy Regulator will notify you of the audit schedule for your project. Until you receive an audit schedule
from the Clean Energy Regulator you must continue to audit all reports submitted. Once you receive an audit
schedule, you will only need to provide an audit with those reports identified in the schedule.
All projects must complete and submit an initial audit. If you submitted an offsets and audit report for your
Carbon Farming Initiative project before the Emissions Reduction Fund was established, that audit is
regarded as an initial audit.
If you have not yet submitted an audit, you will be required to submit an initial audit of your project with
your first offsets report however, it is important to note that you do not need to do this straight away.
All projects need to undertake subsequent audits as per Table 1.
For the Clean Energy Regulator to determine the number of audits required for your project and provide you
with an audit schedule, you must estimate the average annual abatement of your project.
If you estimate your project’s average annual abatement to be less than 10,000 tCO2-e, notify the Clean
Energy Regulator by email to erf@cleanenergyregulator.gov.au. Remember to include your EOP number and
project title in your email with ‘Average annual abatement less than 10,000’in the subject line.
If you estimate your project’s average annual abatement to be more than 10,000 tCO2-e, you will need to
submit an FAE to the Clean Energy Regulator. You can do this by sending an email to
erf@cleanenergyregulator.gov.au with ‘FAE for my project’ in the subject line and including the following
information in your message:

ROE number

EOP number

Project title

FAE for your project.
To assist you further, the Clean Energy Regulator has developed ‘Audit in the Emissions Reduction Fund’.
How do I sell my ACCUs?
Enter into a contract with the Government
What you need to know: As a scheme participant of the Emissions Reduction Fund you are able to apply
to enter into a contract with the Government to sell your ACCUs into the future. The contract is a standard
market contract that guarantees purchase of your ACCUs by the Clean Energy Regulator at the contracted
price. To secure a contract, you will need to bid successfully at an auction run by the Clean Energy Regulator.
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What you need to do: Seek independent legal advice.
Visit the Clean Energy Regulator website for more information about entering into a contract with the
Government and bidding into an Emissions Reduction Fund auction.
Are there any changes to legal obligations?
Permanence
What you need to know: Carbon Farming Initiative projects that store, or sequester, carbon in soil or
vegetation agreed to a ‘permanence obligation’ of 100 years.
This meant a sequestration project needed to be maintained for that period. If a fire or other disturbance
occurred in the area during the project lifetime, causing a decline in the amount of carbon stored, regrowth
had to be managed to allow the carbon stock to return to previously reported values. Alternatively, ACCUs
equal to the loss of carbon caused by the disturbance had to be returned, or relinquished, to the Clean
Energy Regulator.
Under the Emissions Reduction Fund, new sequestration projects are still subject to a permanence
obligation, but have the option to choose either a 100 year permanence period or a shorter period of 25
years. In general, a permanence period commences from the date the first ACCUs were issued.
Sequestration projects that were operating under the former Carbon Farming Initiative can choose to stay
with the 100 year permanence period or swap to a 25 year permanence period. If you decide to vary the
permanence period for your project, you must do so within two years of the Emissions Reduction Fund
commencing.
In all cases, the Clean Energy Regulator will publish nominated permanence periods on the Emissions
Reduction Fund Register.
Deciding which permanence period to sign up for is an important business decision. Once you nominate a
permanence period, you will not be able to vary that period. This condition also applies to Carbon Farming
Initiative projects that swap from the 100 year permanence period, to the shorter 25 year period. If you
choose the 25 year option, there will be a 20 per cent reduction in the number of ACCUs issued for your
project. This is to cover the potential cost to the Government of replacing carbon stores after the project
ends.
The five per cent risk of reversal buffer required by the Carbon Farming Initiative remains under the
Emissions Reduction Fund.
Projects moving to the 25 year permanence period that have already received ACCUs under the Carbon
Farming Initiative, will have 90 days to relinquish an amount of ACCUs equivalent to the 20 per cent
reduction for their project, but can approach the Clean Energy Regulator to seek an alternative schedule to
relinquish ACCUs.
What you need to do: If you would like to keep the 100 year permanence period, you do not need to do
anything. If you would like to change the permanence period from 100 years to 25 years, you can apply to do
so within two years of the Emissions Reduction Fund commencing. To apply, send an email to
erf@cleanenergyregulator.gov.au with ‘Change to permanence period’ in the subject line and include in
your email the following information:

EOP number

Project title
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
A statement indicating that you wish to change the permanence period for your project from 100 years
to 25 years.
Following receipt of the email, the Clean Energy Regulator will send you details on the implications for your
project and a declaration that must be signed to activate the change.
Carbon sequestration right
What you need to know: Under the Emissions Reduction Fund, you are no longer required to hold the
carbon sequestration right for a sequestration project. Instead you only need to demonstrate that you have
permission from the person or entity holding the carbon sequestration right to run a project on their land
and receive ACCUs for abatement achieved.
What you need to do: There is no action required with regard to your project under the Emissions
Reduction Fund. You may wish to transfer the carbon sequestration right back to the person or entity it was
originally held by, but in doing so you must make sure you have their permission to run a project on their
land and receive ACCUs for abatement achieved.
Can I withdraw my project?
What you need to know: A scheme participant may apply to revoke their project. This is done by
submitting a request to the Clean Energy Regulator via email. The Clean Energy Regulator will then revoke
the project, which means it will be removed from the Register of Offsets Projects and Emissions Reduction
Fund Register and will no longer be eligible to apply for ACCUs.
For existing sequestration projects, you should be aware that a voluntary relinquishment of the same
number of any issued ACCUs must be made before a request for revocation is made. This is done through
the Australian National Registry of Emissions Units (ANREU). Your obligations relating to the project continue
until the Clean Energy Regulator confirms that your project has been revoked.
What you need to do: If you wish to have the Clean Energy Regulator revoke your project and have it
removed from the Register of Offsets Projects, you are required to send an email to
erf@cleanenergyregulator.gov.au with ‘Request to revoke project’ in the subject line and with the following
details in your email:

EOP number

Project title

A statement indicating you wish to have your project revoked.
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Some changes to terms
With the introduction of the Emissions Reduction Fund, some of the terms you were familiar with under the
Carbon Farming Initiative changed. The table below shows which terms have changed.
Carbon Farming Initiative
Emissions Reduction Fund
Project proponent
Scheme participant
Certificate of Entitlement
Abatement statement
Domestic Offsets Integrity Committee
Emissions Reduction Assurance Committee
Methodology determination
Method
Eligible offsets project
Registered project
Project offsets report
Project report
Project declaration
Project registration
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